Financial Services Commission

Commission des services financiers de l’Ontario

Neutral Citation: 1999 ONFSCDRS 14

Appeal P97-00062

OFFICE OF THE DIRECTOR OF ARBITRATIONS

VITO SALVAGGIO

Appellant Respondent on the Cross-Appeal

and

SIMCOE & ERIE GENERAL INSURANCE COMPANY

Respondent Appellant on the Cross-Appeal

Before:

Susan Naylor, Director’s Delegate

Counsel:

Russell J. Howe (for Vito Salvaggio)

Larry J. Kielbowich (for Simcoe & Erie)

APPEAL ORDER

Under section 283 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:

Paragraph 4 of the arbitrator’s order dated October 14, 1997 awarding Mr. Salvaggio expenses of $400 in respect of a psycho-vocational assessment and report by Dr. J.M. Lacroix is rescinded and the following substituted:
Vito Salvaggio is entitled to expenses in the amount of $1,670 in respect of a psycho-vocational assessment and report by Dr. J.M. Lacroix.
Paragraphs 1,2, 3 and 5 of the arbitrator’s order are confirmed.
cross-appeal is dismissed.
Mr. Salvaggio is entitled to 50% of his reasonable expenses for counsel’s time and 100% of his reasonable expenses for disbursements for this appeal and cross-appeal.

January 21, 1999

Susan Naylor

Director’s Delegate

Date

REASONS FOR DECISION

I. NATURE OF THE APPEAL

This appeal concerns the existence of a contract of employment between Vito Salvaggio and Far East Food Products Ltd. (“Far East”).

Mr. Salvaggio claims he had accepted a job offer as a sales representative with Far East but had not yet started work when the accident happened. The purported job offer is set out in a letter dated January 7, 1994, under the company’s letterhead and signed by R. [Raymond] Lee, Vice- President, Sales. This letter forms the basis of Mr. Salvaggio’s claim. Mr. Salvaggio and Mr. Lee confirmed the offer in their testimony at the arbitration hearing.

In a decision dated October 14, 1997, the arbitrator concluded that Mr. Salvaggio did not have a contract of employment on the terms set out in the letter and that he could not advance a claim for income replacement benefits under the “contract of future employment” criterion in s. 7(1) 3 of the Statutory Accident Benefits Schedule - Accidents after December 31, 1993 and before November 1, 1996, O. Reg. 776/93 as amended by O. Reg. 781/94 (“SABS-1994”).¹

Under this provision, a person qualifies for income replacement benefits if he or she “was entitled at the time of the accident to start work within one year under a legitimate contract of employment that was made before the accident and that is evidenced in writing.” Benefits are based on “the gross income payable under the contract of employment, extrapolated to reflect an annual income” (s.9 (5) 1). Had the offer been found genuine, Mr. Salvaggio would have been entitled to benefits because the arbitrator accepted that his injuries ruled out a sales representative position for the duration of the period claimed.

Mr. Salvaggio appeals the arbitrator’s rejection of his claim. He asks for a new hearing and an order that a claimant qualifying under s. 7(1) 3 of SABS-1994 may include anticipated commission in calculating his or her income replacement benefits.

There was also a dispute about an outstanding account for a psycho-vocational report prepared by Dr. J.M. Lacroix, a psychologist. The arbitrator ordered only part-payment. Mr. Salvaggio also appeals this order

GAN Canada cross-appeals the arbitrator’s disposition of the claim. It complains that he did not address its request for repayment and should not have awarded Mr. Salvaggio his arbitration expenses.

One aspect of the appeal can be disposed of summarily. GAN Canada objected to the appeal at the outset on the basis that it does not raise a question of law as required by s. 283(1) of the Insurance Act, R.S.O. 1990, c. I-8, as amended by s. 39 of the Automobile Insurance Rate Stability Act, 1996, S.O. 1996, c. 21. The amendment restricting appeals to questions of law came into effect on November 1, 1996. Mr. Salvaggio applied for arbitration before then. Commission appeal decisions have held that the restriction does not apply to cases already in arbitration on November 1, 1996.² I heard no arguments why this approach was wrong but even if the restriction were to apply, I am satisfied that the appeal, as framed, is proper.

II. BACKGROUND

The accident happened on February 13, 1994,³ the day before the starting date stipulated in the letter. Mr. Salvaggio suffered soft-tissue injuries which gradually resolved, but his recovery was complicated by depression and other psychological problems. Simcoe & Erie General Insurance Company (now GAN Canada Insurance Company (“GAN Canada”),⁴ paid Mr. Salvaggio $387.01 a week, subject to indexation,⁵ until September 15, 1995. The amount was based on the minimum base salary described in the offer. GAN Canada then terminated benefits, taking the position that Mr. Salvaggio had recovered sufficiently to meet the job requirements of a sales representative and also questioning the legitimacy of his contract with Far East. Mr. Salvaggio claimed an extra year’s benefits (to October 11, 1996) at an increased rate of $506.25 a week. He arrived at this rate by factoring in his anticipated annual commission from sales in the job.

The arbitrator set out the evidence in detail, the gist of which is as follows: Mr. Salvaggio was self-employed in a pizza business in partnership with his brothers. In late 1993, they arranged to sell the business, closing the transaction on January 5, 1994. Far East is a distributor of food products, mainly flour and other dry bakery products. Mr. Salvaggio purchased flour from the company for his pizzeria. He and Mr. Lee apparently developed a satisfactory business relationship over several years, allegedly leading to the offer in question. There is no evidence that the relationship between the parties was other than arms-length.

The January 7, 1994 letter describes Mr. Salvaggio’s duties as a sales representative as including the sale of Chinese food products and bakery products, and developing the company’s market opportunities in the pizzeria business. It specifies a base salary of $30,000 a year, plus a graduated commission on sales over $500,000. It also allows a further 1% commission on products “which you source and we import,” applying “to all products which you are currently negotiating on our behalf.”

Mr. Lee explained the rationale behind the offer. According to his testimony, the company was interested in expanding its marketing opportunities in the pizzeria industry, including the sale of associated products such as cheese and tomato sauce that might be available to Mr. Salvaggio through his business connections and ethnic roots at more competitive prices than Far East could find. Since he was available, the company agreed to hire him to develop that market niche.

The arbitrator did not believe Mr. Salvaggio’s and Mr Lee’s account. While he was prepared to believe that the parties had some kind of arrangement, he was not persuaded that terms in the letter, indicative of an formal employer-employee relationship with a guaranteed minimum salary, were genuine. In reaching this conclusion, he cited inconsistencies, contradictions and a lack of detail in respect to all major areas surrounding the offer. He identified the following:

Discrepancies and a lack of specifics as to who initiated contact about the employment opportunity and in the details of the negotiations.

Information in a medical report of Dr. R. Saplys dated June 7, 1994, seemingly contradicting the evidence that there was a written contract in place.

Discrepancies in the salary figures provided by Mr. Salvaggio in his insurance claim documents.

Vague and inconsistent evidence concerning whether Mr. Salvaggio worked for Mr. Lee before the alleged offer.

Discrepancies in the testimony regarding whether Mr. Salvaggio had a job to return to at the company.

The arbitrator found that the relationship was probably more in the nature of a subcontracting arrangement on a commission-only basis. He pointed to various factors drawing him to this conclusion, including the reasons given for the hiring, compensation arrangements for existing sales staff, the commission provision with respect to products then in negotiation, Mr. Salvaggio’s limited experience and his expectation of future work. The arbitrator noted that this assessment was consistent with the opinion of James A. Forbes, a chartered accountant with the accounting firm, Coopers & Lybrand, retained by GAN Canada.

The arbitrator concluded that:

the alleged contract of employment dated January 7, 1994 did not represent the true relationship between Mr. Salvaggio and Mr. Lee.
Mr. Salvaggio was likely a subcontractor of Far East paid on a strictly commission basis.
Mr. Salvaggio and Mr. Lee likely made up the contract after the accident for the sole purpose of advancing Mr. Salvaggio’s claim for accident benefits.
The contract was not legitimate in that the compensation did not reflect the actual agreement.
based on the evidence, the arbitrator could not determine what commission Far East agreed to pay, or the commission Mr. Salvaggio would likely have earned, had he started work.
since the agreement was not legitimate, Mr. Salvaggio was not entitled to an income replacement benefit under paragraph 7(1) 3 of SABS-1994.

III. FINDINGS AND ANALYSIS

The issue before the arbitrator was narrow - whether Mr. Salvaggio qualified for benefits under the “contract of future employment” rule. Mr. Salvaggio did not advance a claim under any other category of eligibility and did not provide any evidence documenting his previous earnings. Accordingly, Mr. Salvaggio’s right to income replacement benefits on other grounds was not addressed.

Mr. Salvaggio objects to the arbitrator’s admission of, and reliance on, second-hand (hearsay) evidence in Dr. Saplys’ report of June 7, 1994. He also argues that the arbitrator erred in admitting, and relying upon, Mr. Forbes’ February 20, 1997 report. He submits that the arbitrator’s findings were not supported on the evidence.

Dr. Saplys, an orthopaedic specialist, assessed Mr. Salvaggio at GAN Canada’s request on June 7, 1994 and again in November 1994. Both reports were filed but Dr. Saplys was not called to testify and his clinical notes were not filed in evidence. On page 3 of his June report, Dr. Saplys states, under “work history”:

At the time of the accident, Mr. Salvaggio had sold his self-employed pizzeria business and states that he had a verbal commitment to begin as a sales representative for Far East Foods.

[emphasis added]

At page 7 of his decision, the arbitrator refers to this comment. He finds that, when the statement was put to Mr. Salvaggio on cross-examination, he “lost his temper and failed to give any explanation.” The arbitrator finds that “Dr. Saplys accurately reported that Mr. Salvaggio told him that he had a verbal commitment to start work”. The discrepancy is included among the factors that led him to make adverse credibility findings against Mr. Salvaggio.

Mr. Salvaggio objects to the admission of Dr. Saplys’ report for any purpose beyond the sphere of the doctor’s medical expertise and argues that the arbitrator erred in using it to reach a conclusion about what he might have said or as to the form of the contract.

Mr. Salvaggio also objects to the admission of Mr. Forbes’ report. At the outset of the hearing, his lawyer cross-examined Mr. Forbes on his qualifications and the nature of his report in an attempt to have his evidence excluded. Mr. Forbes acknowledged on cross-examination that in analysing the offer and comparing it to standard business practices, he was “looking at” the credibility of the offer. According to the transcript, the arbitrator told Mr. Salvaggio he was not going to rely on Mr. Forbes’ opinion “on credibility,” but cautioned that some of the findings of fact on which he might ultimately rely in making his own credibility findings might coincide with those informing Mr. Forbes’ opinion. The entire report was admitted.

At page 9 of his decision, the arbitrator deals with Mr. Forbes’ evidence in the following terms:

James Forbes is a certified fraud examiner employed by a firm of chartered accountants. He was retained by the Insurer to review Mr. Salvaggio’s records. He did not provide an opinion on the amount of income replacement benefits because he had serious concerns about the legitimacy of the contract of employment and because Mr. Salvaggio did not provide any pre-accident income records. Mr. Forbes reported that he thought the terms of the alleged offer implied that Mr. Salvaggio was a self-employed contractor of the business rather than an employee. He reported: “It is our experience that the nature of the terms regarding customer and supplier contracts would lead more to a self-employed status than that of an employee.” This opinion is consistent with my own assessment of the evidence. I find that Mr. Salvaggio was likely a subcontractor of Far East Food Products paid on a strictly commission basis.

Mr. Salvaggio argues that Mr. Forbes’ evidence is inadmissible because it goes only to the credibility of the offer, which is not a proper basis for opinion evidence and is a matter solely for the arbitrator.

Mr. Salvaggio bases his objections on common-law rules of evidence which deal with hearsay and expert opinion evidence. He cites a number of cases, including, in particular, R. v. Abbey, 1982 CanLII 25 (SCC), [1982] 2 S.C.R. 24 (S.C.C.), and relies mainly on the following principles:

Expert opinion evidence may only be given on a subject likely to be beyond the experience and knowledge of a judge or jury due to its technical or scientific nature.
Expert opinion evidence as to credibility (i.e. whether a witness is telling the truth) is not allowed because it is within the capabilities, and core function, of the trier of fact and goes to the ultimate issue to be decided.
While hearsay given through an expert is admissible to show the information on which the expert opinion is based, it is not evidence going to the existence of those facts. The factual basis must be established through properly admissible evidence. Before any weight can be given to the expert’s opinion, the facts on which the opinion is based must be found to exist

Four criteria have been identified with respect to the admission of expert evidence: (a) relevance, (b) necessity in assisting the trier of fact, (c) the absence of any exclusionary rule, (d) a properly qualified expert.⁶ The danger that expert evidence will be misused and can distort the fact-finding process underpins the criteria, particularly the considerations of relevance and of the need for assistance.⁷

The admission of hearsay is guided by the cardinal principles of necessity and reliability.⁸

Commission adjudicators must comply with the rules of fairness and natural justice and with applicable statutory provisions relating to evidence, such as those in the Statutory Powers Procedure Act (“SPPA”).⁹ However, subject to certain qualifications, they are not bound to follow the strict rules of evidence applicable in court proceedings, including the hearsay rule or rules about opinion evidence.¹⁰

Arbitrators therefore have a greater latitude than a court (particularly a court in criminal matters) in dealing with evidence. This allows the focus to be on the weight to be attributed to such evidence rather than the technicalities of admissibility. As one commentator puts it, the rules of evidence should be considered “in terms of the signals that the rules send about a particular piece of evidence.”¹¹ The principles underlying the rules should inform an arbitrator’s approach.

The arbitrator should have clearly addressed the underlying reliability of Dr. Saplys’ report of what was said. It is clear from the transcript that Mr. Salvaggio did not admit to making the statement. The form of Mr. Salvaggio’s job offer was unrelated to the purposes of the examination and of no possible clinical significance to Dr. Saplys. There is no reference to a verbal offer in other reports and no other evidence from Dr. Saplys in corroboration.

Despite these concerns, however, I am not convinced that the arbitrator relied to any significant extent on Dr. Saplys’ evidence. It was but one of a number of factors informing his adverse assessment of credibility. A rehearing is not warranted on this ground alone.

Mr. Salvaggio also objects to the admission of James Forbes’ report on somewhat different grounds. He argues that Mr. Forbes’ evidence was directed only to credibility, on which expert evidence is neither needed nor allowed.

The fact that expert evidence is directed towards the legitimacy of the offer does not necessarily mean that it encroaches on the arbitrator’s function of assessing credibility or that it relates to a subject on which no expertise is called for and so is superfluous. However, in exercising the discretion whether to admit expert evidence, the relevance of the intended evidence, the assistance it can provide an adjudicator and its potentially prejudicial effect are all factors to consider.

Mr. Forbes’ report was very weak. There are many reasons it should not be given much weight. For the most part, it covered matters that required no special expertise. Mr. Salvaggio’s case did not involve complicated financial transactions which expert evidence could help explain. No assistance was needed with respect to the inferences, if any, to be drawn from the existence of grammatical flaws in the offer, the fact that Mr. Salvaggio did not have a vehicle, that his job disappeared shortly after the accident or that he was inexperienced in sales. Evidence in regards to Mr. Forbes’ experience in the area of customer-supplier arrangements might have been more useful, but was too unspecific to be of much value.

I am not persuaded, however, that it was clearly an error to admit the report or that the arbitrator gave the report much weight. His remarks indicate that he appreciated the danger involved in this kind of evidence. In his reasons, he identified the separate factors that drew him to the conclusion that Mr. Salvaggio was more likely a subcontractor of Far East, paid on commission. I am satisfied that he made his own, independent assessment based on all the evidence, as he was required to do.

In fact, the arbitrator went further than he needed to go. He did not need to determine the nature of any other arrangement between Mr. Salvaggio and Far East. Mr. Salvaggio insisted that he was engaged to be employed on the terms set out in the January 7, 1994 letter. It was his onus to prove the claim through credible evidence. The arbitrator concluded that the evidence fell short of meeting this onus. He disbelieved the offer mainly because he found Mr. Salvaggio’s and Mr. Lee’s testimony substantiating it to be vague, contradictory and unconvincing. It was this that led him to conclude that the offer likely did not represent the true relationship between the parties. Having reviewed the record, I am satisfied that this finding did not rest on Mr. Forbes’ evidence to any material extent. There were many other problems with Mr. Salvaggio’s case.

Mr. Salvaggio relied on the letter documenting the offer, but neither he nor Mr. Lee was able to substantiate the offer through credible evidence relating to the surrounding circumstances. Some of the gaps and discrepancies may be explained by the passage of time - the hearing took place more than three-and-a-half years after the accident, and after benefits had been paid on the basis of the offer for a year-and-a-half. Allowance must be made for fading recollections. Mr. Salvaggio’s psychological problems also may have been a factor. His volatility, in particular, may have impeded his presentation and affected the coherence of his testimony. However, there is little to support his contention that the arbitrator gave inappropriate weight to his personal demeanour and comments in the context of his psychological illness. In fact, the transcript shows that even though Mr. Salvaggio had completed his evidence, the arbitrator allowed him to reopen his case so that he could testify about the effect of GAN Canada’s cross-examination on his emotional state. At page 9 of his decision, the arbitrator noted that he took into account Mr. Salvaggio’s psychological problems but could not account for the pervasive deficiencies in the evidence. He found that “every element of the alleged contract revealed inconsistent evidence and lack of credible detail.”

The record supports the arbitrator’s view that the testimony of Mr. Salvaggio and Mr. Lee was vague in relation to virtually all the details and at odds on the specifics. Their evidence was at a level of generality that made it difficult to test. Previous cases have established that an arbitrator’s findings of fact are to be treated with deference on appeal. This is particularly so where findings of credibility are involved. In this case, the arbitrator’s key findings are well-supported on the evidence. Mr. Salvaggio has not shown that the arbitrator made any mistakes sufficiently serious or material to the result to warrant interfering on appeal. His appeal with respect to his income replacement benefits is therefore dismissed.

IV. REPAYMENT

Although the arbitrator did not allow Mr. Salvaggio’s claim, he did not order Mr. Salvaggio to repay any benefit. GAN Canada argues that the arbitrator erred in this, when his findings were tantamount to a finding of fraud, or at least, wilful misrepresentation, entitling it to repayment under s. 70 of SABS-1994.

There is a simple response to GAN Canada’s position. It did not advance a claim for repayment at the hearing. In fact, GAN Canada’s counsel confirmed that “it [repayment] is not an issue in this proceeding”.¹² It is difficult to see how the arbitrator can be faulted for not ordering repayment, when he was specifically told that GAN Canada was not pursuing such an order. Therefore, this ground of appeal must fail.

V. THE COST OF THE PSYCHO-VOCATIONAL REPORT

The arbitrator deals with Dr. Lacroix’s assessment at page 11 of his decision. Dr. Lacroix conducted a psycho-vocational assessment over a two-day period in mid-July 1996 and reported on his results on September 18, 1996. He charged $1,670 for the eight hour assessment and 12 page report. The arbitrator awarded Mr. Salvaggio only $400 of the account. He was not satisfied that the cost was “a reasonable expense for an assessment that tells [Mr. Salvaggio] mostly what he already knows or that tells him that he should take training if he wants to pursue a career in these areas.” The arbitrator concluded that after hearing Mr. Salvaggio testify as to his background, interests and abilities, he expected a psychologist could have arrived at conclusions similar to Dr. Lacroix after only a two-hour interview. Mr. Salvaggio argues that there was no evidence to support this finding which was supposition on the arbitrator’s part.

I do not accept Mr. Salvaggio’s proposition that reimbursement of expenses of this nature is, essentially, an “all-or-nothing” proposition or that the arbitrator is precluded from applying his own common-sense is assessing the reasonableness of a professional’s account. However, there is merit to the suggestion that the arbitrator’s findings may have been overly influenced by his view of the value of the end-result, without giving sufficient consideration to whether the assessment was a reasonable measure in the circumstances at the time it was arranged.

The psycho-vocational assessment was suggested as part of a treatment program put in place by Dr. McLachlan, Mr. Salvaggio’s treating psychologist. In a letter dated December 1, 1995, Dr. McLachlan asked GAN Canada to approve continued therapy. By this time, Mr. Salvaggio’s income replacement benefits had been terminated as a result of the findings of an earlier Designated Assessment Centre (“DAC”) evaluation. Dr. McLachlan disagreed with the DAC findings and expressed the view that Mr. Salvaggio was still not able to function occupationally. Shortly afterwards, on December 14, 1995, he wrote to Mr. Salvaggio’s lawyer, recommending that Mr. Salvaggio consider an alternative career direction and suggesting a vocational assessment to help him with his options. Dr. D’Onofrio, Mr. Salvaggio’s family doctor, wrote a handwritten note endorsing this suggestion.

In mid-February 1996, Dr. McLachlan faxed a note to Dr. D’Onofrio, recommending an additional six months of psychological treatment and a psycho-vocational assessment. Dr. D’Onofrio prepared a second note in concurrence. Although this material does not indicate whether it was forwarded to GAN Canada, there is no suggestion that GAN Canada was not advised about the suggested course of action and it is reasonable to assume that was the purpose of Dr. D’Onofrio’s notes. GAN Canada then referred the question whether Mr. Salvaggio required any further psychological treatment to a Medical and Rehabilitation DAC. The DAC assessment was conducted by Dr. Lambros Mermigis, a psychologist with the Columbia Comprehensive Rehabilitation Centre, on March 22, 1996. His report is dated May 3, 1996.

Dr. Mermigis did not mention anything about a psycho-vocational assessment in his report. However, he agreed that Mr. Salvaggio was suffering from an adjustment disorder of moderate severity and needed between four and six months additional psychological treatment. He stated that the nature of the treatment should not be altered significantly as Mr. Salvaggio and Dr. McLachlan seemed to be “on the right track,” but recommended that the psychological treatment “attempt to help the client to more strongly focus on vocational re-integration.” On page 5 of his report, he commented:

This may require some work in that Mr. Salvaggio holds the belief that he needs to be completely symptom free before engaging in any type of work. This belief is obviously a hindrance to his return to work and, if possible, needs to be modified to the extent that the client would be willing to attempt some type of part-time, modified work. In fact, it might be helpful if this were presented to Mr. Salvaggio as a treatment goal to be met before the end of the treatment.

Dr. McLachlan subsequently sent Mr. Salvaggio to Dr. Lacroix for the psycho-vocational assessment to identify suitable vocational options for him.

Mr. Dwight Robinson, GAN Canada’s claims examiner, was asked at the hearing why the company would not pay for the report. The main reason he gave was that it went beyond the recommendations of Dr. Mermigis. He also added that he did not see the need for an assessment, given that Mr. Salvaggio had been released for work by a DAC, the previous August.

However, Mr. Robinson was unable to confirm whether Dr. Mermigis was asked to consider the appropriateness of the recommended assessment.

It does not seem unreasonable, in these circumstances, for Mr. Salvaggio to have continued with arrangements for the assessment. His own doctors recommended it. While not specifically endorsed by Dr. Mermigis, it could be taken as consistent with the overall direction of his report, which stressed the need for psychological treatment to focus on vocational re-integration and to set the goal of returning Mr. Salvaggio to some type of part-time, modified work. It is difficult for GAN Canada to rely on Dr. Mermigis’ silence in regards to the reasonableness of an assessment, when it is unclear whether he was asked to consider it. I also note that, according to the arbitrator’s findings, Mr. Salvaggio’s psychological condition continued to interfere with his ability to return to employment until a time after the date of the assessment, reinforcing the legitimacy of his doctors’ approach.

The fact that the conclusions Dr. Lacroix reached were not particularly helpful is a factor to take into account, but the reasonableness of the expense should not be judged solely with the benefit of hindsight. There is no evidence or suggestion that the duration of the assessment, or the amount charged for it, was out-of-line with similar assessments, or the charge was otherwise unreasonable. Given the evidence, there is insufficient reason to deprive Mr. Salvaggio of the full cost of the assessment.

The arbitrator’s order that Mr. Salvaggio is entitled to $400 for the cost of Dr. Lacroix’s psycho- vocational assessment and report is rescinded. An order entitling Mr. Salvaggio to the full cost of Dr. Lacroix’s services in the amount of $1,670 is substituted.

VI. EXPENSES

GAN Canada appeals the arbitrator’s order awarding Mr. Salvaggio his expenses of the hearing. It argues that the arbitrator found that Mr. Salvaggio was dishonest in advancing a claim that was not legitimate. It cites other decisions in which expenses have been denied or reduced where dishonesty has been found.

An award of expenses is a matter within the discretion of the arbitrator, although the discretion must be exercised reasonably. Because the discretion is given to the arbitrator, it should not be interfered with lightly on appeal

In TTC (Markel Insurance Company of Canada) and Murray (P-007913, August 28, 1996), a case in which I described the arbitrator’s award of expenses as “unquestionably generous”, I said:

...the issue is not whether I agree with the award, or would have made the same order if I had heard the case. The question is whether the arbitrator exercised the discretion given to her in an unreasonable manner.

It was not argued that the arbitrator unreasonably fettered her discretion by the application of rigid rules, but that her findings of fact should have led to a different result. A party’s misrepresentation or dishonesty, especially if they are carried through to the hearing, are important factors to consider, and may well disqualify the party from expenses. As I said in Allison,¹³ applicants who engage in this type of conduct run a real risk that their expenses will be denied. But an arbitrator must be given considerable leeway to exercise the discretion as he or she sees fit, according to the circumstances of the particular case.

The discretion must be exercised in light of the particular facts of the case. While the arbitrator’s award here is somewhat surprising, I am unconvinced that he failed to exercise his discretion within the limits of that discretion. Although he stated that Mr. Lee and Mr. Salvaggio probably made up the contract to advance Mr. Salvaggio’s claim, I agree with him that the evidence falls short of establishing fraud. His decision rests on the fact that he did not accept Mr. Salvaggio’s and Mr. Lee’s evidence in a case in which Mr. Salvaggio has the onus of proof. He thought that the case had some merit. Mr. Salvaggio’s recovery of the full cost of Dr. Lacroix’s report on appeal is an additional factor.

In all the circumstances, there is insufficient reason to disturb the arbitrator’s exercise of discretion in this matter.

VII. APPEAL EXPENSES

Mr. Salvaggio was successful in challenging the arbitrator’s order relating to Dr. Lacroix’ report and also in resisting GAN Canada’s cross-appeal. However, these were less significant aspects of the appeal. The bulk of his written and oral submissions was directed at his income replacement benefits. In all the circumstances, including the merits of the appeal and the degree of success, Mr. Salvaggio is entitled to 50% of his reasonable expenses for counsel’s time and 100% of his reasonable expenses for disbursements for this appeal and cross-appeal.